A Less Than Honest Policy

There is a middle-class tax time bomb ticking in the Senate’s version of President Obama’s effort to reform health care.

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

If the White House thought they could slip the bailout of Fannie and Freddie through by announcing it in a Christmas Eve news dump, think again. Dennis Kucinich just released this statement:

“As Chairman of the Domestic Policy Subcommittee of the Committee on Oversight and Government Reform, I’m announcing that the Subcommittee will launch an investigation into the Treasury Department’s recent decision to lift the current $400-billion cap on combined federal assistance to Fannie Mae and Freddie Mac, opening the way for additional, unlimited funds through the end of 2012. This investigation will include the role played by Fannie Mae chief executive Michael J. Williams and Freddie Mac chief executive Charles E. Haldeman in the decision, if any, and will seek to ensure that the additional assistance is used for homeowners and not Wall Street.”

“Many questions remain unanswered regarding this move by the Treasury. Why suddenly remove the cap? Indications are that Freddie and Fannie, even as millions of Americans lose their homes, have used just $111 billion of the $400 billion previously available to them. Is lifting the cap on assistance a back-door TARP?”

The chart at the right from the St. Louis Federal Reserve shows that banks have record low liquid assets, and that they continue to decline even though the recession is over.

These banks must maintain sufficient ALLL, or Allowance for Loan and Lease Losses, to cover their Nonperforming Loans. The chart shows that Nonperforming Loans almost equal the banks’ total assets, and loan losses are growing.

A recent Detroit News story reports that the US Treasury will give GMAC – General Motors Acceptance Corporation – an additional $3.5 billion of capital. This is on top of $13.4 billion already given to GMAC by US taxpayers to prevent GMAC from going bankrupt due to its bad housing loans.

Earlier this week the Treasury announced that it would loan unlimited amounts of money to Fannie Mae and Freddie Mac, removing the renewable cap on taxpayers transfers to the mortgage lenders.

The chart at the right shows that while credit card charge-offs are rising at Bank of America, the provisions for credit card losses are falling. The fall in provisions for credit card losses at Bank of America and the extremely low ALLL to capital ratio is due to another level of speculation by the banks. They are gambling that their attempt to create a false image of high earnings by minimizing the capital to cover losses will pay off in higher stock prices.

The risk to this gamble is that continuing credit card delinquency and more failed home and commercial mortgages will confront the financial system with another crisis of solvency. The banks are willing to take this risk because they continue to directly control the US Treasury and the Federal Reserve and indirectly control a majority in the US Congress. They believe another bailout is a lock.

This control was challenged only once when a storm of opposition to the first bailout by an enraged public resulted in a No vote in Congress. As documented by Michael Moore in his new film, Capitalism, A Love Story, this vote was reversed through a carefully orchestrated campaign in the media and behind closed doors to thwart the public’s will. Treasury Secretary Henry Paulson threatened Congress with the imposition of martial law if the vote were not reversed.

If the first vote of Congress to deny the bailout had stuck, these insolvent banks would have been liquidated and their owners would have taken the losses instead of the US taxpayers. This was the procedure used during and after the depression to deal with banks that were ruined due to either stupidity or corruption. Now that the banks have so much power financially and politically their owners can use the Congress to make the American people cover their losses.

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China unveils ‘world’s fastest train link’

Sat Dec 26, 7:54 am ET

BEIJING (AFP) – China on Saturday unveiled what it billed as the fastest rail link in the world — a train connecting the modern cities of Guangzhou and Wuhan at an average speed of 350 kilometres (217 miles) an hour.

The super-high-speed train reduces the 1,069 kilometre journey to a three hour ride and cuts the previous journey time by more than seven and a half hours, the official Xinhua news agency said.

Work on the project began in 2005 as part of plans to expand a high-speed network aimed at eventually linking Guangzhou, a business hub in southern China near Hong Kong, with the capital Beijing, Xinhua added.

“The train can go 394.2 kilometres per hour, it’s the fastest train in operation in the world,” Zhang Shuguang, head of the transport bureau at the railways ministry, told Xinhua.

Test runs for the service began earlier in December and the link officially went into service when the first scheduled train left the eastern metropolis of Wuhan on Saturday.

By comparison, the average for high-speed trains in Japan was 243 kilometres per hour while in France it was 277 kilometres per hour, said Xu Fangliang, general engineer in charge of designing the link, according to Xinhua.

Beijing has an ambitious rail development programme aimed at increasing the national network from the current 86,000 kilometres to 120,000 kilometres, making it the most extensive rail system outside the United States.

China unveiled its first high-speed line at the time of the Beijing Olympics in 2008 — a service linking the capital with the port city of Tianjin.

In September, officials said they planned to build 42 high-speed lines by 2012 in a massive system overhaul as part of efforts to spur economic growth amid the global downturn.

The network uses technology developed in co-operation with foreign firms such as Siemens, Bombardier and Alstom.

With election anomalies showing up all over the Buckeye State in 2004, and no “major” party candidate willing to question them, presidential
candidates David Cobb of the Green Party and Libertarian Michael Badnarik showed the courage to stand up and call for a recount as an
investigation.

On December 13, 2004 recounting began in Board of Elections offices all over Ohio. The Green Party had over 2000 volunteer observers trained and they were deployed in every one of the 88 Ohio counties. People from all walks of politics pitched in to assist and search for the truth. As one of nine statewide regional coordinators helping the Greens to prepare observers, I was in Jefferson County (Steubenville) that morning and I will never forget the feeling of being part of history. I will also not forget the feeling of being under observation by armed Sheriff’s Deputies as we observed the proceedings.